mumbai 07 03, 2012, 17:10 IST
The BSE Sensex ended higher on Tuesday, although it gave up most gains after hitting its highest level since mid-April, led by gains in telecom stocks such as Bharti Airtel , after a tribunal's split verdict on 3G mutual roaming pacts.
IT stocks, however, continued to drag the indexes, falling for the second day, on poor near-term demand outlook due to delays in decision making by clients.
Analysts said markets have now started positioning for the upcoming earnings season which will reflect the performance for April-June quarter.
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"The June quarter results are not expected to be so great," said Sunil Jain, head of retail equity research at Nirmal Bang.
"Macro indicators are showing some signs of improvement, where as corporate results are not expected to be so buoyant immediately," Jain added.
Uncertainty over the monsoon coupled with doubts about whether the government will be able to walk the talk on policy reforms due to compulsions of coalition politics seem to have added a cautious undertone on the prevailing optimism.
Stocks gave up most gains, ignoring the gains in the rupee, which rose to over a month-and-half high, that has served as a lead indicator for stock performance in the previous few months.
MSCI's broadest index for Asian shares outside Japan rose 1.2 percent.
The 30-share BSE Sensex rose 0.15 percent to 17,425.71 points, finishing lower from day's opening level for the second consecutive session, a sign traders say reflects consolidation.
The broader 50-share Nifty rose 0.18 percent to 5,287.95 points.
The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) on Tuesday gave a split verdict on a challenge by mobile phone operators seeking to overturn a government order requiring them to stop offering 3G services beyond their licensed zones through mutual roaming pacts, lawyers said.
Shares in Bharti rose 2.7 percent while Idea Cellular rose 5.4 percent.
Morgan Stanley expects mixed June-quarter results from the top four Indian tech companies, with muted revenue guidance but a steep EPS upside.
Tata Consultancy Services fell 1.6 percent, while Infosys ended 0.4 percent lower.
Jefferies started coverage of Indian pharmaceutical sector with "buy" ratings on Sun Pharmaceutical Industries , Ranbaxy Laboratories and Cipla , citing its preference for companies with high exposure to chronic/complex therapies and strong emerging market presence.
Ranbaxy rose 1.2 percent, while Sun Pharma and Cipla fell marginally.
Deutsche Bank also upgraded Indian utilities sector to "neutral" from "underweight" based on strong end-user demand and policy initiatives.
Deutsche Bank's top picks in utilities include Power Grid and Jaiprakash Power Venture .
Powergrid fell 0.8 percent, while Jaiprakash Power ended 0.9 percent higher.
Consumer goods stocks ITC and Hindustan Unilever fell for the second day on churning in favour of other sectors.
Cigarette maker ITC fell 1.4 percent, while Hindustan Unilever fell 1.2 percent.